ASPs and the New Information Technology Frontier

By Sandy LeDuc
LeDuc and Sikowitz

Small to medium-sized companies are being targeted by application service providers promising solutions to their information technology needs for less through shared applications and equipment. Providers charge a rental fee for services such as hosting and the use of commercially available software. In addition, the ASP can act as a data storage facility.

The applications typically delivered through the Internet could include Web site and email hosting, electronic data interchange support, accounting software, database management, human resource and sales systems management to name a few.

The possible benefits of ASPs include:

• Lowered cost of information technology.
• Long-term smoothing of the IT budget.
• Lack of internal distraction in the implementation of new applications.
• Availability to road warriors and homebodies alike.
• Availability of software that would otherwise be outside the budget.

A service level agreement will define, in addition to time and financial arrangements, the level of customer support, system security standards, performance standards, guarantees for system availability, problem resolution time guarantees. It might provide for penalties or incentives.

Just like any other purchase there is homework to be done. The standard questions about vendors apply:

• Who are they, how long have they been an ASP and who were they before?
• Who is actually providing the service, what kind of software and equipment is being used and what has their track record been? What is the method of delivery and how has that performed?
• What is the level of security inherent to the operation?
• Who is running the company and what is their collective experience?
• Who are their customers and what is their level of satisfaction?
• Was the application developed as a Web product or adapted for Web use?

Don’t look for all the answers from this first generation of ASP:

• Most of the software is not customizable. These resources are likely to provide cookie cutter solutions that are easier to manage.
• The commercially available software may not totally Web enabled.
• Access to these applications relies on current communication infrastructure which has some geographic as well as capacity constraints.

These may well be solutions for many companies. Make the first decision on the checklist whether the company is best served by operating on this new frontier.

Fall 2000 - Volume 10, Number 4